Silicone Expo N.A. a 'focal point' for trends across the aisles, miles

DETROIT—The ever-evolving silicone industry coalesced for two days in the Motor City, as more than 130 exhibitors from all points on the supply chain presented at Huntington Place as part of Silicone Expo North America.

Technical presentations took attentive audiences on deep dives into sustainability and recycling, and panels on red flags in the silicon metal supply chain were well-attended.

And networking was apparent in every handshake at every booth.

"Silicone Expo North America opened its doors to the silicone community for its second edition at Huntington Place," Nathan Reuby, CEO of United Kingdom-based Select Global Events, told Rubber News. "The event is starting to become the main focal meeting point for an industry that is ... being adopted into more applications, ranging from automotive to medical and aerospace, consumer products and HVAC, to name just a few.

"Global attendees (were there) to learn, network, meet new suppliers and do business in a highly focused and specialized subject."

Familiar industry trends also were on the minds of many at Silicone Expo N.A.

One of those was the transition to electric vehicles.

Specialty Silicone Products Inc., a 70-plus employee silicone compounder and fabricator based in Ballston Spa, N.Y., saw healthy traffic at the show.

Business Development Manager Dominic Testo, who sits on the advisory board for Silicone Expo North America, said the choice of Detroit was "a clear acknowledgment of the importance of silicone rubber to the automotive industry."

"At SSP we see the expo as an excellent opportunity to network within the industry with major suppliers and a handful of customers, gauging the personal conversations on what people are seeing and hearing," Testo told Rubber News. "We view the show as an industry-wide leadership summit."

Testo added that Select Global Events "really finds ways to make the show better."

"They are making great efforts, and they are always looking at how to make it better. The team is ready, willing and able to be flexible.

"We have heard the positive and the constructive feedback."

Through discussions at his trade show booth and throughout the event hall, Testo shared five other lessons that echoed through the aisles of Huntington Place.

There's pressure to cut prices across the supply chain, Testo said.

During and following the pandemic, OEMs were forced to absorb price hikes across the board, and the continuing inflation bolsters the argument for cost increases in raw materials and logistics.

"OEMs that absorbed price increases during and after the pandemic are looking for ways to cut costs," Testo said. "Today, pressure to reduce prices spans the silicone supply chain and is affecting material manufacturers and gasket fabricators alike."

To satisfy demand, companies need to leverage their own supplier relationships without cutting corners on quality or compliance, Testo said.

"SSP will make efforts to improve process capability and output," he said. "We spent the whole pandemic trying to get things out the door however we could. Now we can be more efficient.

"It is important to do our part to suit our customers' margins. We know there have been tough economic times for OEMs. A bunch of our customers had a ton of inventory after the pandemic. We are starting to see that shift."

SSP typically works in specialty advanced silicones for the aerospace and defense industries, specifically in the EMI-shielding space.

Most companies claim that business is down after a record year in 2022, Testo said.

He specified that the waning bottom lines seem to be occurring with fabricators, extruders, die-cutters, molders and "customers with parts on the shelf."

"They over-bought out of fear ... this tends to be companies in the middle of market," Testo said.

Other companies—especially upstream raw material and monomer suppliers like Wacker Chemie A.G. and Shin-Etsu—have reported record quarters on top of record quarters.

"For many reasons, 2022 meant record sales for the silicone industry," Testo said. "With the pain of COVID-related shortages still fresh, companies also bought more than they needed to secure their supplies. Because of this overbuying, businesses are drawing down their inventory and buying less in 2023."

Silicone supplies are improving, but there is cause for concern at the top of the chain.

China refines more than 70 percent of the world's silicon metal (using "dirty coal" as feedstocks), with the U.S. coming in at about 5 percent (with cleaner coal and renewable feedstocks).

Bill Hightower (Ferroglobe), Scott Kearns (ElastaPro Silicone Sheeting), Andrew Schunk (Rubber News) and Ken Baker (NewAge Industries Inc.) offered their thoughts as part of a panel at Silicone Expo N.A. that tackled the upstream issue for silicon metal refineries.

Solutions include awareness on a federal level or perhaps a public-partnership to establish refineries.

"Because China produces such a large share of raw materials, trade disputes and geopolitical tensions could disrupt the silicone supply at any time," Testo said. "That's why industry leaders are working with domestic suppliers and even the U.S. government to ensure that the risks, especially to critical industries, are understood."

Silicon metal is refined in varying grades for use in silicone rubber; polysilicon for solar arrays and microchips; metal alloys, especially aluminum; and in anodic form for battery applications.

In addition, silicone monomer—polydimethylsiloxane—is in short domestic supply as well, with Dow as the only producer of PDMS in North America since Momentive's move to Europe several years ago.

Optimism about the economy was lacking at Silicone Expo North America, Testo said.

"The U.S. economy is growing at a modest pace, but most of the companies that we spoke with at Silicone Expo weren't feeling optimistic," Testo said. "They're concerned about the possibility of an economic slowdown, even as economists disagree over the likelihood of a recession in 2024.

Consumer spending is good—for now, he said.

"But the silicone industry is facing challenges ranging from inflation to worker shortages," Testo said.

According to Bloomberg.com, the economy is growing modestly, but people "generally are worried about a quiet recession and the overall economy," Testo said. "With everything going on geopolitically, a lot of small business owners are being careful to project growth."

Silicone Expo North America was further evidence that in-person gatherings are back, Testo said.

"And that's good news for everyone," he said. "Projects move forward more quickly when you are meeting in-person. ... This is always much better than over email or Zoom."

For the second year in a row, the silicone industry gathered for an event that wouldn't have happened during the height of the pandemic.

That's good news for the industry.

"But it doesn't end there," Testo said. "Many companies are making in-person sales calls again, and they're also visiting clients to provide technical advice and support.

"In-person gatherings like this will shorten the sales cycles in the silicone world. Things are long enough in general."